RBA Official Warns AI Investment Drives Inflationary Pressures

Reserve Bank of Australia Assistant Governor Sarah Hunter stated that artificial intelligence has not yet meaningfully increased productivity or caused widespread job losses. Speaking at a UBS conference in Sydney, Hunter noted that while AI investment initially boosts demand and adds price pressure to a supply-constrained economy, these inflationary effects may dissipate as data center capacity expands and broader productivity gains are realized.

Hunter highlighted that a boom in domestic data center investment contributed to the Reserve Bank of Australia raising interest rates five times this year to an 18-year high of 4.85%. She warned that AI could pose risks to financial stability, potentially leading to sharp asset price repricing if investment returns fail to meet expectations.

Regarding the workforce, Hunter observed tentative signs of labor market adjustment, including weaker job postings in AI-exposed occupations.